Non-Cancellable Refund Insurance with High Refund Rates Cannot Be Sold

[Asia Economy Reporter Oh Hyung-gil] The refund rate of no-surrender and low-surrender value insurance, which has been controversial for incomplete sales due to excessive refund rates, will be limited to within the standard insurance refund rate. A system will also be established to check insurance agents disciplined for insurance fraud.

On the 18th, the Financial Services Commission held a regular meeting and approved the "Amendment to the Insurance Business Supervision Regulations" containing these details. The amendment will take effect from the 19th.

No-surrender and low-surrender value insurance has no surrender value or a lower surrender value compared to general insurance upon early termination, but the premiums are cheaper. It has been criticized for being disguised and sold as savings insurance due to its refund rate after payment being higher than that of standard insurance.

The Financial Services Commission stipulated that no-surrender and low-surrender value insurance should be designed with refund rates within those of standard insurance during the insurance period. A Financial Services Commission official stated, "With product design according to the amendment, premiums will become even cheaper, and consumer benefits for protection purposes are expected to increase."

Products will be developed in line with the original intent of affordable premiums and relatively high insurance coverage. Product development reflecting reductions in guarantee fees without lowering premiums or increasing insurance benefits is prohibited. However, variable insurance is excluded.

To enhance substance, product brochures have been added to the insurance policy understanding evaluation. Previously, special contracts were added to the general evaluation target, and the evaluation weight was increased from 10% to 30%.

To eradicate insurance fraud, a system will be established to allow checking of insurance agents disciplined for fraud. If an agent receives administrative sanctions or internal disciplinary actions such as suspension of work for three months or more due to insurance fraud, insurance companies and agencies will be able to check them.

This content was produced with the assistance of AI translation services.